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M&A: Bashneft acquires Burneftegaz for more than $1 billion

Russia-based Bashneft Group established control over a 100% stake in LLC Burneftegaz, a company conducting exploration and producing oil in Tyumen region. The transaction had previously been approved by Russia's Federal Antimonopoly Service, Bashneft informed.

The value of the transaction exceeded $1 billion including the amount of debt. The sources of funding for the transaction included borrowings.

Through its wholly owned subsidiaries, LLC Burneftegaz is entitled to explore and develop the Sorovskoye field (the Vostochno-Vuemskiy license block) and the Tortasinskoye field (the Tortasinskiy license block) with total C1+C2 oil reserves amounting to 53.4 million tonnes. Commercial production was launched at the Sorovskoye field in 2013. LLC Tortasinskneft, a wholly owned subsidiary of Burneftegaz, also holds licenses for geological prospecting operations at the Severo-Ityakhskiy 3 and Vostochno-Unlorskiy subsurface sites.

"The acquisition of Burneftegaz fully meets the requirements of our strategy for the upstream segment, which involves expanding the resource base and acquiring promising assets which have considerable production potential," said Bashneft President Alexander Korsik commenting on the transaction. "This transaction will enable considerable expansion of the Company's footprint in Tyumen region, where we are already implementing a number of successful upstream projects."

The Sorovskoye and Tortasinskoye fields are located 150 kilometers to the south-west of Nefteyugansk and 137 kilometers to the north of Khanty-Mansiysk, respectively. The licenses for these fields are valid until 2032. In 2013, oil production at the Sorovskoye field totaled approximately 300,000 tonnes. 33 production wells have been drilled at the field, and infrastructure required to treat and deliver oil to the oil system of JSC Transneft is functioning.

To date, 2D seismic surveys covering 575 linear kilometers and 3D seismic surveys covering 234 square kilometers have been conducted, 7 prospecting and exploration wells have been drilled, a pilot production project has been approved, and production drilling has started at the Tortasinskoye field.

The Severo-Ityakhskiy 3 and Vostochno-Unlorskiy subsurface sites are located 152 kilometers to the north of Khanty-Mansiysk and 228 kilometers to the south-west of Surgut, respectively. Under the terms of the license, 2D seismic surveys covering 578 linear kilometers have been conducted at the Severo-Ityakhskiy 3 subsurface site, exploration drilling has started. 2D seismic surveys covering 592 linear kilometers have been conducted at the Vostochno-Unlorskiy subsurface site, the drilling of the first exploration well is slated for 2015.

JSOC Bashneft (tax number: 0274051582) is the leading enterprise of the fuel and energy sector in Russia's Republic of Bashkortostan. The company produces oil in the Republic of Bashkortostan, regions of West Siberia, and in Orenburg region. As of January 1, 2014, Bashneft's proven oil reserves as per PRMS amounted to 2.045 billion barrels of oil. In 2013, Bashneft increased oil production by 4.1% to 16.073 million tonnes. Bashneft's Ufa oil refining complex processed 21.399 million tonnes of oil in 2013 (+3% year-on-year).

IFRS net profit of Bashneft for 9 months 2013 decreased by 21.3% to RUB 32.542 billion from RUB 41.347 billion for the same period in 2012. Revenue increased by 6.2% to RUB 417.054 billion from RUB 392.688 billion, adjusted EBITDA by 1.1% to RUB 76.981 billion from RUB 76.119 billion.

According to the DataCapital information retrieval system, RAS net profit of Bashneft for 9 months 2013 increased 1.45-fold year-on-year from RUB 33.545 billion to RUB 48.764 billion. Revenue went up 4% to RUB 373.811 billion. At the same time, cost value decreased by 10% to RUB 192.355 billion from RUB 214.208 billion.

AK&M "M&A Market"

"AK&M", 27.03.2014 10:31


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